Your Help With Down Payment For A Rent to Own Home

May 12, 2017 typesofaid.com Staff
There are many misconceptions with the rent-to-own option when shopping for a new home. Many buyers understand this as an alternative to the traditional homebuying process, but the rumors and myths abound. It’s not a home you rent until you’ve paid off the amount the seller is asking for it. It’s not a home you rent until it’s paid off in full and now belongs to you. It’s a home you move into on the basis of renting it. You’ll place a security deposit on the home just as you would a true rental home, and you’ll create an agreement with the sellers. In this situation, the agreement is that you will rent for a specific amount of time before you purchase the home from the seller.

Some sellers work this situation differently, and there is nothing wrong with that. Some rent-to-own homes are rented for many years, some for one year. Buyers who look into this idea typically have two problems at hand. The first problem is they want to rent the property for a while so they can save money for a down payment for a home. Doing this means the buyer is still paying rent, but that rent is going toward the overall cost of the home. The second issue a buyer might have is a challenging credit history. They need more time to improve their credit so they qualify for a good interest rate on a home loan.

In a typical rent-to-own situation, buyers have a chance to save money by living in the home and reducing the overall cost. The sales price is locked in, the rental term is locked in, and the timeframe to get a bank loan with which to purchase the home is locked in. All buyers must do now is find a home loan through a lender before the pre-decided deadline, and they must come up with a down payment.

Finding a Rent-to-Own Down Payment

The good news for buyers is the rent-to-own down payment is just like any other down payment. You’re applying for a traditional mortgage when you purchase this home. You’ll want to apply for one with at least 20% down. This is the only way to avoid paying Private Mortgage Insurance along with your mortgage payment. If you can’t save for a down payment or simply don’t make enough money to do so, there are options.

Down payment assistance is offered to homebuyers in every state in various locations. Your seller is required to sell you their home following the expiration of the lease you signed using a mortgage you obtain through a lender. If the lender requires a down payment, you find one in many locations.

• Your state homebuyer’s down payment assistance program
• Local down payment assistance programs
• National down payment assistance programs

The best tool at your resource right now is a realtor or your local lender. They can both provide you with a list of state and local programs that allow you to apply for down payment assistance when you need it most. There are hundreds of programs available across the nation in every state designed to help first-time homebuyers, buyers who spent time in the military, and buyers who are considered low-income.

Down Payment Assistance Requirements

Each program you look into has its own set of requirements. You’ll find the one that’s best matched with your financial situation, the home you’re buying, and the parameters of your purchase. Your lender will help you find the right program and submit the right paperwork. So long as you are sure you meet all the requirements from the program, you’ll be approved for down payment assistance and well on your way to purchasing your former rental.

Down payment assistance is difficult to pinpoint without knowing your income, your location, and the type of home you’re buying. That’s why you want to speak with your lender or realtor. He or she can help you with your own search given they are aware of your personal story. This makes buying a breeze, and it also makes it much more affordable for you and your family to finally realize the American dream.

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